QBE
Insurance Group is joining the ranks of Australian financial services companies offshoring jobs and business functions as the general insurer seeks to lower costs under chief executive, John Neal.

Company documents seen by The Australian Financial Review suggest QBE plans to employ more than 700 staff in a Manila-based group shared services centre by the end of 2013.

Last month the AFR revealed QBE was planning job cuts of at least 700 employees in its Australian division this year, as Mr Neal forges ahead with a $US200 million annual operating cost savings drive across the group.

ANZ and Westpac are among the financial services companies to come up with offshoring plans in recent months. QBE, which will report its full-year profit results on Tuesday, employs more than 16,000 people in 52 countries, of which about 4382 work in the Australian underwriting business.

A 33-page presentation document from October 5 outlined design details of a group shared services centre (GSSC) aimed at driving down operating costs.

A separate spreadsheet, updated on February 1 and also seen by the AFR, outlines the number of employees expected to based at the GSSC by the end of the year, including department and office location details.

It is possible that QBE has adjusted part of the plans since the document was published. It is also expected that QBE will provide details on its cost reduction initiatives on Tuesday. The document suggests QBE’s Australian business had already extended its on-shore National Service Centre footprint into Manila last year as a “proof of concept centre of 60 FTEs [full-time employees]."

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Another 40 employees were earmarked to be moved into the National Service Centre late last year “whilst fitting out the new larger facility to support the planned transitions in 2013", it said.

“The GSSC design has assumed this as a starting point and has created an industrialised operating model to support the initial Australian transition of 700 [plus] FTE planned during 2013," according to the document.

The centre will include staff working in claims lodgement, management and reinsurance administration, among other functions, the spreadsheet showed.

The centre will also cater for three time zones – which are understood to be Australia, Europe and North America – in its “end state", according to the presentation.

QBE has declined to comment on the documents obtained by the AFR.

Range of cost-cutting initiatives

After the AFR published a report on staff cuts last month, a company spokesman said Mr Neal had “previously advised the market that QBE is looking to reduce annual operating costs by more than $US200 million in coming years".

“This will be achieved through a wide range of initiatives as we work more closely across the 52 countries in which QBE employees are based," he said at the time.

Mr Neal said at the group’s half-year results in August that QBE continued to “work very hard behind the scenes on run rate savings, which we believe will be in excess of US$200 million".

“That’s $US200 million P&L [profit and loss] or 2 per cent on our expense ratio based on 2010 expenses for 2014," Mr Neal said at the time. QBE’s share price fell 15.8 per cent in 2012 compared with a 13 per cent rise for the S&P/ASX 200 Index, but the share price has rallied nearly 21 per cent since early January.

Shares in QBE closed at $13.18 on Friday.

The Financial Services Union said in December 2011 that its QBE members were worried about claims positions being created in Manila among other concerns.

The union argued that if the latest offshoring numbers were accurate, QBE should “do the decent thing, and inform their work force of their plans", national secretary Leon Carter said after being approached by the AFR.

“If this information is correct, it brings the number of finance sector jobs offshored this year to over 1200. That’s a higher rate of offshoring than we have seen in previous years."

QBE is not alone in taking the razor to costs and jobs. Last week, ANZ said it would make 70 positions in its wealth division redundant as it moves the jobs to Bangalore in India.

Redundancies at ANZ came after Westpac confirmed that up to 134 positions were at risk of being cut – the affected jobs are mainly in back-office mortgage processing and business analytics.

Last year,
Insurance Australia Group
outlined plans to cut 600 jobs in its CGU business. Suncorp has also been scaling back employee numbers and outsourcing jobs as it soldiers on with its three-year “building blocks program" aimed at reaping $235 million in savings by the year ending June 30, 2013.